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The First Marijuana Hearing Of The New Congress Has Been Scheduled

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Congressional Democrats are already moving ahead with plans to consider broad changes to federal marijuana laws in 2019.

Whereas the Republican-controlled House for the past several years had blocked votes on most cannabis-related measures, the chamber’s new Democratic majority on Wednesday announced it has scheduled a hearing for next week to examine the difficulties that marijuana businesses face in opening and maintaining bank accounts.

Titled, “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses,” the hearing will take place on February 13 before a subcommittee of the House Financial Services Committee.

Although a growing number of states are moving to legalize marijuana for medical or recreational use, cannabis remains federally prohibited. As a result, and despite a 2014 guidance memo released on the topic by the Obama administration aimed at clearing up the issue, many financial services providers remain reluctant to work with the industry out of fear of violating money laundering or drug laws.

“When we introduced this bill six years ago, we warned that forcing these businesses to deal in cash was threatening public safety. No hearing was given,” Rep. Denny Heck (D-WA) said in an email, referring to marijuana banking legislation he and Rep. Ed Perlmutter (D-CO) have filed for the past several Congresses.

He lamented that Republican leadership didn’t schedule a hearing on the proposal even after a security guard at a Colorado dispensary was killed during a robbery.

“Chairwoman Waters has made it one of her first priorities to address this urgent and overdue issue, demonstrating that she understands the threat to public safety and the need for Congress to act,” Heck said of the committee’s new leader. “We have a bipartisan proposal to allow well-regulated marijuana businesses to handle their money in a way that is safe and effective for law enforcement to track. I am eager to get to the work of refining it and passing it into law.”

That a hearing on the issue was in the works was first noted earlier this week by Politico, and Marijuana Moment reported that the full committee is also actively planning to vote on a marijuana banking bill in the coming months.

The newly scheduled marijuana hearing is a signal that Democrats intend to move cannabis legislation this year, and is likely to be the first in a series of committee-level actions across the House on the issue.

“The upcoming hearing presents a real opportunity for the Democratic Party to assert their leadership by finally beginning the conversation on how we end the failed policy of marijuana criminalization,” Justin Strekal, political director for NORML, said.

While two limited medical cannabis research bills were able to advance out of House committees last year, they never made it to the floor for votes. Meanwhile, Republican leaders consistently prevented members from offering marijuana-related amendments—including ones on banking issues—to larger legislation.

In contrast, Rep. Earl Blumenauer (D-OR) suggested in a memo to party leaders late last year that they pursue a step-by-step approach to legalize marijuana in 2019. His plan recommends that Financial Services and other committees first begin holding hearings on incremental reforms like banking access, research expansion and medical cannabis for military veterans before passing bills on those issues as part of a lead up to ultimately approving broader legislation to formally end federal marijuana prohibition by the end of the year.

A House bill to protect banks from being punished for working with state-legal marijuana businesses that Heck and Perlmutter introduced garnered 95 cosponsors in the last Congress, and 20 senators signed onto a companion bill, but neither were given hearings or brought up for votes.

“Depriving state-legal cannabis businesses of basic banking services and forcing them to operate entirely in cash presents a significant safety risk, not just to those businesses and their employees, but to the public,” Don Murphy, director of federal policies for the Marijuana Policy Project, said in an email. “Support for addressing the cannabis banking problem is strong and bipartisan, and it appears Congress may be ready to adopt a real, commonsense solution. Members concerned about public safety should be jumping at the chance to express their support for this legislation.”

Congress has held only a handful of hearings on marijuana reform issues in recent years, and never before has any come at a time when broad cannabis reform legislation seemed to be conceivably on its way to passage.

“This hearing is historic for cannabis policy reform advocates, business owners and the banking sector, and could directly lead to the first in what is hopefully a series of positive changes in the 2019 legislative cycle,” Morgan Fox, media relations director for the National Cannabis Industry Association, said in an email. “Allowing banks to work with cannabis businesses more easily will benefit public safety, increase transparency, provide more financing options for small businesses and communities that have been targeted by prohibition, and help companies thrive so they can further displace the illicit market.”

Outside of the two committee markups of cannabis research legislation last year, which were not preceded by formal hearings on the relevant issues, Senate panels have on a few occasions held lengthy discussions on marijuana.

In 2013, for example, the Senate Judiciary Committee convened a hearing to dig into the fact that a growing number of states were legalizing marijuana in contrast with federal law.

The Senate Caucus on International Narcotics Control, which is not a formal standing committee of the body, hosted a discussion on federal marijuana enforcement in 2016. Its two cochairs, Sens. Charles Grassley (R-IA) and Dianne Feinstein (D-CA), have long been among Congress’s most vocal opponents of cannabis reform, though Feinstein began to shift her position last year.

Also in 2016, the Senate Judiciary Committee’s Subcommittee on Crime and Terrorism held a hearing on the risks and potential benefits of medical cannabis, but it did not lead to votes on any marijuana legislation.

Meanwhile, pressure to address cannabis banking has been growing. Several top Trump administration officials have indicated they support clarifying the issue.

Treasury Secretary Steven Mnuchin, for example, suggested in testimony before a House committee early last year that he supports letting marijuana businesses store their profits in banks.

“I assure you that we don’t want bags of cash,” he said. “We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”

In a separate hearing Mnuchin revealed that addressing the issue is at the “top of the list” of his concerns.

Federal Reserve Chairman Jerome Powell said that the growing gap between state and federal marijuana laws “puts federally chartered banks in a very difficult situation… It would great if that could be clarified.”

And last month, Comptroller of the Currency Joseph Otting called on Congress to “act at the national level to legalize marijuana if they want those entities involved in that business to utilize the U.S. banking system.”

Meanwhile, although many major financial institutions are staying away from the cannabis industry, federal data does show that an inceasing number of banks are beginning to work with marijuana growers, sellers, processors and related businesses.

It hasn’t yet been announced who will be testifying at next week’s cannabis banking hearing before the Consumer Protection and Financial Institutions Subcommittee.

This piece was first published by Forbes.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 20-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

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USDA Touts Hemp Industry’s Growth But Says Challenges Remain

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Hemp production in the U.S. has scaled up rapidly since lawmakers lifted federal prohibition of the crop, with more acres of hemp grown in the country today than at any point since the 1940s. But the fledgling industry is still very much in flux, and reporting practices that vary wildly from state to state have hampered efforts to fully understand it.

Those are the top-level takeaways of a report released Wednesday by the U.S. Department of Agriculture (USDA) that explores the economic viability of the American hemp industry as the country transitions to a legal era.

After decades of prohibition due to hemp’s close relationship to its high-THC cannabis cousin marijuana, Congress in 2014 approved state-level pilot programs, allowing growers in certain states to produce and sell hemp as part of limited research initiatives. In 2018, lawmakers went further, ending federal hemp prohibition entirely. Since then, the sector has exploded.

Approved US producer hemp licenses 2014-2018

“Under the pilot programs, United States industrial hemp acreage reported by States increased from zero in 2013 to over 90,000 acres in 2018, the largest U.S. hemp acreage since the 146,200 acres planted in 1943,” the USDA study found. “By December 2019, hemp could be grown legally in every State except Idaho, Mississippi, and South Dakota.”

As of last year, more than 146,065 acres of planted hemp were reported to the agency.

The 83-page report, “Economic Viability of Industrial Hemp in the United States: A Review of State Pilot Programs,” attempts to draw conclusions about the legal, logistical and economic challenges that might arise as US farmers return to a crop that hasn’t been grown in the country for generations.

One of the biggest obstacles, the study shows, is keeping everyone on the same page.

“There is no systematic comprehensive data source regarding the emerging United States hemp industry or requirement to report a consistent set of data for the pilot programs,” noted the authors, who said they drew on annual reports, website information, internal USDA data, unstructured discussions with state agencies and other third-party information to compile the document.

“States collected data at various times and levels of aggregation,” the study says. “For example, some States report hemp data by intended end use (i.e., grain, fiber, cannabidiol (CBD) or other extracts) while others do not report data.”

US hemp acreage and greenhouses

Inconsistency between state requirements was one of the main obstacles highlighted by the report. USDA found that state-level hemp programs ran into a handful of common problems, starting with the difficulty of passing state-level legislation to regulate the new programs. Other problems arose in obtaining “critical production inputs,” such as seeds and insecticides, or in trying to easily distinguish industrial hemp from high-THC marijuana, which remains federally illegal.

A fundamental problem, the USDA report found, was “lack of basic data and information for decision-making”—something that should come as no surprise to anyone who’s watched a legislative hearing on cannabis.

Getting stakeholders involved early seemed to help smooth some wrinkles, the study found. In some states, authors wrote, “hemp legislation failed repeatedly, typically because of law enforcement concerns or lack of public support.”

“Colorado and Kentucky are two examples of States that included law enforcement stakeholders early when establishing their pilot programs,” the report notes. “This allowed an early basis for dialogue and shared knowledge.”

Data from state pilot programs also led analysts to conclude that while industrial hemp is a burgeoning industry in the U.S., it likely won’t emerge as a strong economic player in every state.

“As with other crops, it is not likely that hemp will be economically viable in every State,” the study concludes. “States that moved quickly to establish pilot programs were not leading producers of competing major field crops,” it found, and “growers are not likely to plant or process hemp if more profitable options exist.

Hemp-producing states could also run into competition internationally, the report says, acknowledging that the U.S. is one of many hemp-producing regions globally. “While the reintroduction of hemp production in the United States is relatively recent,” it says, “hemp production has already been legal in other parts of the world,” including Canada, Europe and China.

Canada hemp production

Under a recent trade deal with the U.S., China agreed to import more American-grown hemp and other agricultural products over the next two years.

For now, the rising tide of interest in hemp-derived CBD appears to be lifting all boats. “Global production was small and relatively stable until the recent worldwide interest in CBD oil,” the USDA study found. “There is some demand for hemp as a sustainable natural fiber, hemp seeds and protein as a food ingredient, and hemp extracts for cosmetics and food, but CBD oil has been the primary source of demand growth.”

Earlier this month, USDA officials said they won’t be able to comply with a request by farmers and some state lawmakers to increase the federal THC limit on industrial hemp, which is currently defined as cannabis that contains no more than 0.3 percent THC. Advocates had asked for that limit to be increased to 1 percent, but the agency said that’s a job for Congress.

They did, however, say that a new public comment period will be opened before hemp rules are finalized.

China Must Import More Hemp From U.S. Under New Trade Deal

Photo courtesy of Brendan Cleak.

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Businesses Are More Profitable And Innovative In States With Legal Marijuana, Study Finds

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States have been experimenting with various forms of marijuana legalization for years and, according to new research, business is better where cannabis is legal.

To investigate the impact legalization has on the economy, researchers at the University of Iowa analyzed 9,810 corporations between 1991 and 2017, finding “a multitude of positive effects” after a state enacts medical marijuana laws.

“Firms headquartered in marijuana-legalizing states receive higher market valuations, earn higher abnormal stock returns, improve employee productivity, and increase innovation,” the authors said.

The study, which was reviewed by Marijuana Moment but has yet to be published, found that having cannabis laws on the books can unleash the previously untapped potential of employees and helps companies attract new talent.

Corporations “become more productive and hire more productive human capital from out of state after the passage of the law,” the authors wrote.

They also report that “firms earn higher net income per employee” after a medical cannabis law is passed, and “the positive impact is sustained over the next two years.”

Additionally, the study found a 4.2 percent increase in company value, which translates into an average increase of the market-value of corporations by $166 million after a medical marijuana law is enacted.

“Firms experience an increase in profitability likely due to the positive shock to the human capital post-legalization,” the study finds.

“State-level medical marijuana laws have a considerable positive impact on firms in the state, likely by having a positive impact on the human capital of firms.”

Higher profits and more productivity aren’t the only benefits a company sees after marijuana is legalized. When it comes to stock prices, companies located in states with medical cannabis fare better than those in jurisdictions where the plant is prohibited.

Additionally, the stock value of corporations in medical marijuana states increased by 4.56 percent. An “equal-weighted portfolio” composed of similar stocks located in states without a medical marijuana program showed a loss of about two percent annually.

Returns on stocks were also 4.44 percent higher per year for companies in states that have legalized.

What’s the source of such financial benefits? The authors suggested that companies will ramp up innovation after marijuana laws are passed, making the company more profitable over time, compared to their counterparts in areas that don’t permit cannabis at all.

“Our results imply that after marijuana legalization, firms not only apply for more patents and receive more citations on those patents, but also are more productive and efficient in generation innovation output from labor and [research and development] input,” the study determined.

“We also find an increase in both entrepreneurial activity and venture capital funding in states that legalize marijuana.”

Finally, the study measures the “innovation productivity” of those working, living and moving to the state, following the passage of a medical marijuana law.

“The inventors that are in the state both before and after legalization become more creative” post-legalization, the authors found.

And when it comes to attracting new talent from other states, “more inventors relocate to states after medical marijuana legalization than before passage of the law.”

The benefit is two-fold for such corporations. In addition to being “able to attract more productive inventors” in states with medical marijuana “relative to states that do not legalize,” existing employees also see an uptick in innovation after a cannabis law is passed, the study concluded.

House Lawmakers Caution Key Senate Chairman Not To Overhaul Marijuana Banking Bill

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Company Gets Trademark For The Word ‘Psilocybin,’ Frustrating Decriminalization Advocates

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As psychedelics reform efforts pick up across the U.S., there’s an increasing weariness among advocates about the potential corporatization that may follow.

That’s why many found it alarming when a California-based company announced on Thursday that it had successfully trademarked the word “psilocybin,” the main psychoactive constituent of so-called magic mushrooms.

Psilocybin™ is a brand of chocolates that do not contain the psychedelic itself but are meant to “begin educating, enlightening and supporting the community in upgrading their inner vibrations in order to get everything they want of their time here on earth,” according to a mission statement.

Soon after founder Scarlet Ravin shared news of the trademark on LinkedIn, advocates raised questions and concerns: What does that mean on a practical level for other psilocybin organizations? Why should one brand get exclusive rights (to a certain legal extent) to the scientific name of a natural substance?

The reality of this particular trademark is more nuanced than it might appear at first glance. While it’s true that the company was granted the distinction by the U.S. Patent and Trademark Office, it’s specifically for educational materials and it’s listed on the supplemental register, rather than the principal register, which means it would be incumbent upon the brand to prove that it has earned distinctiveness of the mark if the issue went to court.

“It’s certainly good for her business to have that mark, but I think at the end of the day, it’s going to be somewhat weak,” Larry Sandell, an intellectual property attorney at Mei & Mark LLP, told Marijuana Moment. He added that this example is “indicative that people are trying to stake early claims to IP.”

“Even if they might be somewhat overreaching, people see a potential new market here and they want to stake out their ground,” he said. “It’s a big next space that people are anticipating a legal market. Maybe it’s where cannabis was five to 10 years ago.”

Despite those legal limitations, reform advocates view the trademark as emblematic of a bigger issue—that someone would presume to take ownership of a substance that’s at the center of a national debate on whether or not to criminalize individuals for using it.

Kevin Matthews, who led the successful campaign to decriminalize psilocybin mushrooms in Denver last year and is the founder of the national psychedelics advocacy group SPORE, told Marijuana Moment that he didn’t doubt Ravin had the right intentions—to promote education into the substance—but he said the decision to trademark is nonetheless questionable.

“This being an open-source movement, trademarking the word psilocybin, in some ways it feels like—although I don’t think this is her intention—it’s lacking perspective,” he said. “Does that mean we can’t use psilocybin as SPORE because we’re an educational non-profit and she’s a for-profit branded company? It doesn’t make a lot of sense to me. She needs to let go of the trademark.”

Ravin said that her goal in trademarking psilocybin was to prevent the substance from being becoming the next cannabis, which she said has been corrupted from its “true spiritual, medicinal benefit” and turned into a corporate commodity.

Via Psilocybin.

“Knowing that psilocybin is going to be next [to be legalized] I feel strongly guided by the deepest part of my heart to really offer a sense of education of what could be when you take such a strong, beautiful medicine and to give people an education platform here and now to let them know what’s coming, how to receive it, how to get the most benefit from,” she told Marijuana Moment in a phone interview.

“We paved the way for this being a medicinal offering and not a consumer, recreational shitshow. That was our intention,” Ravin said. “The only way that we are going to have access to mainstream consumers is by having some sort of trademark on the word so that we can use it for something that’s not what it actually is.”

“With this being something that we can now put into market with a box of chocolates that has no psilocybin in it, but as you can already see, it creates a platform for discussion of what the beauty of this plant can do,” she said. “Me and my movement and my team, we don’t own the word. We’re not going to ever sue anyone who also uses the word—we’re opening a doorway for ourselves and anyone that wants to see this educated upon so that we can hit people who are unfamiliar with it now with downloads to actually have this be a safe, successful psychedelic transition.”

Asked to react to criticism about the trademark from advocates, Ravin said “we’re all here to follow spirit guidance to show love and light, and the visions I had of doing what we’re doing now was based upon breaking boundaries and breaking perceptions and allowing people to have an opportunity to sink into being one unit.”

“Yeah, it might be coming out, we might be using the platform of psilocybin. We can use any platform to do this,” she said. “We can use any platform to come together as a whole, and the longer that people sit in duality and say, ‘oh now she’s going to have a stronger voice than me is just looking at something not through their heart,’ it’s looking at it through ego and judgement.”

“The more that we describe what we’re doing, the more people I think will start to feel our unity and we’ll be able to move together as a stronger force than pointing fingers and trying to separate one another,” she said. “Those days are done.”

Ravin said that once the Psilocybin™ chocolates are ready for market, she plans to contribute 10 percent of profits to the Multidisciplinary Association for Psychedelic Studies (MAPS), which is involved in researching therapeutic benefits of psychedelic substances.

Congressman Backs Ballot Measure To Legalize Psychedelic Mushrooms For Therapeutic Use

Photo courtesy of Wikimedia/Workman.

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